Disappointing reads on December retail sales from the government and the National Retail Federation (NRF) conflicted with generally upbeat assessments on the entire holiday season -- which includes post-Christmas shopping in January -- from the nation's retailers.
There may now be some confusion for investors to sift through as to the real health of U.S. consumers armed with gas price savings and perhaps better job prospects.
The Commerce Department reported on Wednesday that adjusted retail sales in December fell 0.9%, worse than the 0.1% increase predicted by economists. Excluding volatile auto and gasoline sales, which paints a truer picture on spending in the malls and online, retail sales in the month declined 0.3% against expectations for a 0.5% gain. A majority of the retail categories the government measures notched sales declines in December, paced by 1.6% and 1.9% decreases in electronics and building materials, respectively.
The National Retail Federation's December retail sales tally, which excludes automobiles, gas stations and restaurants, decreased 0.9% seasonally adjusted month-to-month. The NRF characterized December's sales as "disappointing."
But the December sales letdowns were in contrast to companies ranging from coffee sellers to apparel retailers voicing confidence in the health of the U.S. consumer post-holiday. Several of them improved their fourth-quarter outlooks compared to prior months.
"We had a good close to the end of the year," said Dunkin Donuts (DNKN) Chairman and CEO Nigel Travis to TheStreet on Monday at the ICR XChange conference. The company lifted its full-year same-store sales estimate for Dunkin Donuts U.S. to 1.6% from a downwardly revised outlook of 1.4% shared just weeks earlier on Dec. 18.
Travis mentioned that there has never been a tight correlation with the company's sales and gas prices, but prices "have come down so significantly you have to think it's helpful." Dunkin Donuts says it's beginning to see people buy more expensive items from its vast menu.
Buying a $4 egg white flatbread sandwich to go along with a $5 premium iced coffee from Dunkin Donuts could be happening after a sweat-inducing workout wearing new $98 Lululemon (LULU) yoga pants.
Also on Monday at the ICR XChange conference, Lululemon raised its fourth-quarter sales and earnings guidance, several weeks after saying its latest product introductions were bringing people back to its stores. Some of those new products from the athleticwear maker are on the pricey side, featuring hidden pants pockets to store tech gadgets or flowery prints on pants that look sexy enough to wear during a post-workout cocktail where even more money could be spent.
Lululemon, citing "strong holiday results", raised its fourth-quarter comparable store sales guidance to an increase of 6%-7% vs. a low-single digit percentage previously. Its EPS outlook for the quarter was hiked to $0.71-$0.73 from $0.65-$0.69.
Several apparel retailers, including American Eagle Outfitters (AEO), Aeropostale (ARO) and Children's Place (PLCE), all raised their earnings guidance for the fourth-quarter last Thursday due to strong sales and less discounting over the holidays and post-Christmas.
Children's Place in particular said that the customer reaction to its spring merchandise has been strong, which was noteworthy in plain sight of the artic blast that has gripped the country since Christmas. Even retailers that sell electronics enjoyed a bumper holiday season, counter to the Census Bureau's December data.
Conns (CONN), which operates 80 electronics and appliance stores in the south, said consumer electronics sales spiked 7.5% in December. Demand was strongest in the television and gaming hardware departments. Costco (COST) highlighted solid sales of consumer electronics in December as well.
The strength in the electronics category from Conns and Costco is likely to appear in the holiday sales numbers that Best Buy (BBY) is expected to announce on Thursday morning.